Credit cards aren't always just instruments solely used to pay for big-ticket items or to go on a spending spree. They can give as well as take away. If you like to get something for nothing on the odd occasion, or fancy yourself something of a bargain hunter, a reward credit card might be a product that's your speed.

Reward program credit cards come in all different forms. At their core, however, they're about letting cardholders profit in a real way from their use of a credit card. In the right hands, they can reap cardholders quite the bounty.

How do reward program credit cards work?

Reward credit cards let cardholders earn a certain amount of points for every dollar they spend. When a user has racked up a sufficient number of reward credit card points, they can then exchange these for particular benefits, which will depend on the credit card provider. The rewards may be available include:

Flight rewards, where cardholders will build up points for a particular airline or group of airlines, and may even have their travel insurance and concierge services covered.

Retail rewards, allowing users to build up points that you can redeem at particular stores. You might even get bonus points for shopping at particular retailers or buying a specific product.

Cash back rewards, which refund you a small part of what you've spent.

Supermarket rewards, where using your reward program credit card for everyday spending at a particular supermarket can earn you free extras.

What are the benefits of reward credit cards?

It's true that reward programs are meant to be an incentive for bigger spending. As such, simply spending for the sake of earning points will only be detrimental. However, as long as you use your card responsibly, it's possible to benefit significantly from reward credit cards.

For example, if you tend to spend at particular outlets or supermarkets, a reward credit card linked to those stores may end up netting you a lot of free items. You were going to spend the same amount of money there anyway, after all — by switching to your reward credit card, and making sure to pay the balance off in full and on time, you're simply getting free extras on top of your regular spending.

Big spenders who like to flash the plastic can also profit. In this case, you're not altering your behaviour in any way — you're simply capitalising on your regular spending.

Finally, frequent flyers will be able to make the most of reward credit cards. Whether they're frequently hopping on planes for business trips or just have the travel itch, these types of cardholders may not only be able to make full use of airline points, but also take advantage of deals on hotels.

By contrast, card users who are on a budget, don’t pay off their cards in full or on time, prefer to do their spending through other means or aren't big travellers may want to avoid reward program credit cards. Otherwise, they may end up paying fees and getting into debt for a card they don't need.

How do I carry out a reward credit card comparison?

There are a number of different elements that go into a reward credit card comparison. For one, look at the freebies it offers. Do the products and services you get fit with your particular desires and needs? There's no use in spending big with a reward program credit card if you're not going to make use of the bonuses.

Additionally, check the fine print of the card:

How easy are the points to redeem?

Is there a limit on how many you can earn?

Will you be able to earn the points required?

Do the points expire at any point?

What is the dollar to point ratio?

What is the actual value of the rewards?

Regarding the latter, don't simply look at how many points you earn per dollar on each card. To find the best reward credit card for you, look at how many points you need to earn for your rewards, and then compare it with others. Keep the charge in mind, too - a large fee can offset the free extras in some cases. The RateCity reward card comparison shows the actual reward value, based on a spend of $5000 per month, after the card’s annual fee has been removed to give you a truer indication of the cards value after fees.

Hopefully, once you've looked at all of these factors, you’ll feel more secure finding a reward card that suits your spending and lifestyle.

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